Election Over, but Farm Policy Still Looms as Challenge

11/10/2012 10:00 AM
By Chris Torres Staff Writer

Now that the presidential election is over and the focus fades from who will be in control of what, some big issues regarding farm policy remain hanging in the balance when Congress returns for its lame duck session.
And at the top of that list is a new Farm Bill, which would replace the 2008 version that expired at the end of September.
Congress didn’t complete work on a new bill before recessing at the end of September, and as a result, funding for USDA conservation programs, disaster assistance and other programs has run out.
Sam Kiefer, governmental relations director at the Pennsylvania Farm Bureau, said he wouldn’t be surprised if a temporary extension of the 2008 bill is passed, given the busy schedule Congress has once the lame duck session starts on Monday.
“I think Congress is going to look at everything that is going to happen and lame duck and what can be put off,” Kiefer said. “If you look at what Congress has to do, they have to deal with the ‘fiscal cliff,’ they have to deal with these tax expirations.”
The Senate has already passed a 2012 Farm Bill and the House Ag Committee has approved its version, the two bills differing in the amount of cuts to farm and nutrition programs.
The Congressional Budget Office, which does nonpartisan analysis of congressional budget issues, puts the price tag of the Senate Farm Bill at $969 billion over 10 years, a reduction of $23.6 billion from the previous bill, were it allowed to continue.
The House committee’s bill would cut roughly $35 billion from the 2008 version.
U.S. Rep. Tim Holden, D-Pa., who currently sits on the House Ag Committee but lost his re-election bid in the spring primary, blamed House Speaker John Boehner for holding up a vote on the House floor simply because Boehner wants a majority of Republicans to support it.
Now that the election is over and House control will remain in Republican hands, Holden thinks the chances are good a bill could be passed, simply because neither party gained a big mandate from voters and the makeup of the House will be largely the same next year, with the exception of a few seats that will change hands.
“We think it should be done,” Holden said. “It is the best Farm Bill possible. We protected our dairy farmers, we protected the Chesapeake Bay, we made other changes in conservation.”
Rep. Bob Goodlatte, R-Va. and vice chairman of the committee, said in a written statement Wednesday that “consensus has not yet been reached on the spending levels for the 2012 Farm Bill” and that “the debate centers largely around the funding for nutritional programs.”
Goodlatte said the expiration of the 2008 bill is making little impact, since most programs are funded through the end of year.
He expressed confidence that a bill would be passed during the lame duck session.
“I do believe that Congress will address the 2012 Farm Bill before the end of the year, and I will continue working to make important reforms to the dairy and sugar programs while also working to reduce the overall cost of the Farm Bill,” he said.
Parish Braden, spokesman for Rep. Glenn “GT” Thompson, R-Pa., who also sits on the committee, said major issues remain to be hashed out, including the overall cost of the bill and getting better delivery of programs to the public.
Braden said Thompson’s priorities include making sure the bill achieves some sort of deficit reduction and making sure farmers get the tools to implement conservation practices in the Chesapeake Bay watershed.
But he said Thompson is largely in support of the bill approved by the House committee.
“We’re very supportive of the product we voted out of committee. It’s an accumulation of two years of work on hearings and other things,” Braden said. “What you’re probably looking at now, both committees on House and Senate will be trying to get a compromise bill. Again, our message is that it needs to happen.”
Haley Peterson, spokeswoman for Rep. Peter Welch, D-Vt., who also sits on the committee, said that while Welch strongly supports the current committee bill, he is against additional cuts to nutrition programs and cuts to programs promoting energy efficiency and renewable energy on farms.
“Rep. Welch has said that it is simply unacceptable that House leaders have refused to bring this bipartisan bill to a vote in the House. Their failure to lead resulted in the expiration of the current Farm Bill on Sept. 30, leaving dairy farmers across the country more at risk in an already fragile economy,” Peterson wrote by email.
The ramifications of a Farm Bill not being passed could be huge, especially for dairy, according to Jim Dunn, professor of ag economics at Penn State.
Failure to pass a bill would result in farm policy reverting to the permanent Farm Bill of 1949, which for dairy, he said, would result in the milk support price going to 75 percent of parody.
Dunn estimates that would result in a farm gate milk price of $37.28 per hundredweight, which on paper might look great for dairy farmers, but he thinks it would create big problems in the marketplace.
“It would be chaos. That would virtually double the farm price and what’s going to happen is a retail price that will be dramatically higher. A half gallon of milk would be at least 60 to 75 percent higher,” Dunn said.
Even if a Farm Bill is passed, Dunn said dairy farmers will still feel an impact from the fact that the government’s Milk Income Loss Contract (MILC) program, which compensates producers when milk prices fall below the Boston federal order price, will likely not be included in a new Farm Bill.
Dairy farms that generate up to 2.4 million pounds of milk can participate in the program, but Dunn said most Pennsylvania dairies fall below that cap.
Still, he’s surprised a bill hasn’t been passed already and predicts one will probably become law before the new year.
“I think they have to. I’m surprised they haven’t already done it. I think they have to come back, pass something, go to conference and hammer it out,” he said.
It’s not only the Farm Bill that farmers need to watch for.
Kiefer said scheduled budget cuts coming at the beginning of the year, as a result of sequestration, could result in many farm programs being cut significantly, including conservation programs, commodity programs, research and Extension.
Along with that, the estate tax — or death tax — which right now exempts estates up to $5 million in value and sets the tax rate at 35 percent, would change dramatically Jan. 1, with the exemption being limited to estates up to $1 million in value and the tax rate rising to 55 percent, if Congress doesn’t act.
“That will have a devastating impact on agriculture,” Kiefer said.
The capital gains tax is also scheduled to increase from 15 percent to 20 percent.
Whatever happens, Kiefer is certain of one thing: “D.C. will be hopping for the next two months.”